Crumbs Bake Shop secured financing from a prominent investor group on Friday—a prelude to the joint venture's ultimate goal of buying its assets out of bankruptcy and reopening.
The financing provided by Lemonis Fischer Acquisition Company will help the chain cover payroll expenses and the costs of the Chapter 11 bankruptcy filing that it submitted earlier Friday.
Pending bankruptcy court approval, the joint venture —which includes Fischer Enterprises and Marcus Lemonis, Chairman and CEO of Camping World and Good Sam Enterprises and star of CNBC's "The Profit" — intends to acquire Crumbs' assets, form a new privately held company and re-open its locations.
On Thursday, the joint venture investor group first confirmed its plans to provide financing for the struggling cupcake chain.
Since then, the cupcake chain's stock has skyrocketed from 3 cents to 65 cents.
The group noted that its ultimate goal was to add other items to the Crumbs' offerings by incorporating other products owned or controlled by the partners, including Dippin' Dots ice cream, Doc Popcorn, Wicked Good Cupcakes and Little Miss Muffin. Earlier on Friday, Wicked Good Cupcakes announced it would partner with Lemonis.
On Monday, Crumbs shuttered all of its locations following its delisting from the Nasdaq stock exchange about a week earlier.
During a CNBC interview in April, Crumbs CEO Ed Slezak placed part of the blame for the company's difficulty on its flagship product, saying the cupcake is "too narrow of an assortment" and "too tight a niche to attract a sufficient number of people" daily.
Crumbs' rapid expansion coincided with a contraction in cupcake demand. For the year ended in April, cupcake servings from retail shops fell 8 percent, according to market research firm The NPD Group.
After going public in 2011, Crumbs quickly expanded to 79 stores by early August with a sizable mall presence. Ahead of its delisting, the company had been aggressively closing underperforming stores and focusing on licensing efforts as it tried to turn around the business.
Disclosure: "The Profit" is a CNBC show.
—By CNBC's Katie Little